Financing Activities - The company raised approximately $177 million through the sale of about 42,382 shares of common stock from the 2022 ATM Offering[392]. - The company received gross proceeds of approximately $3.4 million from the sale of 0.3 million Series D Preferred Shares in the 2022 ATM Preferred Offering[392]. - The company borrowed $18.9 million in principal amount of term loans, which matured in 18 months and accrued interest at 8.5% per annum[392]. - The loan amount was increased from $18.9 million to $24.3 million in July 2023[394]. - The company entered into a Share Exchange Agreement, resulting in a combined stated value of the Preferred Stock to be issued by ROI of $100 million[394]. - Each share of Preferred Stock will be convertible into 40,000 shares of ROI common stock at a conversion price of $0.25[394]. - The holders of Preferred Stock are entitled to receive dividends at a rate of 5% of the Stated Value per annum from issuance until February 7, 2033[394]. - A term note with a principal amount of $1.1 million was issued at a 12% interest rate, with net proceeds amounting to $1.0 million[397]. - A credit agreement was established with Ault & Company for an unsecured credit facility of up to $10 million, bearing interest at 9.5% per annum[397]. - The company issued a convertible promissory note with a principal face amount of $2.2 million, convertible into shares of common stock at a price equal to 90% of the lowest volume weighted average price during the five trading days prior to conversion[399]. - A senior secured convertible promissory note was sold to Ault & Company for a total purchase price of up to $17.5 million, with a maturity date of October 12, 2028[401]. - The company entered into a securities purchase agreement with Ault & Company to sell up to 50,000 shares of Series C convertible preferred stock and warrants for a total purchase price of up to $50 million[401]. - An additional loan amount of $8.8 million was borrowed, with net proceeds of $7.5 million[397]. - Ault & Company borrowed $36 million and issued secured promissory notes totaling $38.9 million as part of a Loan Agreement with institutional lenders[403]. - Ault Lending purchased 1,220 shares of ALZN Series B Preferred and warrants for a total of $1.22 million, with the purchase price paid by canceling cash advances[405]. - Ault Lending entered into a note purchase agreement for $2.0 million principal face amount convertible promissory notes, sold for $1.8 million, reflecting a $0.2 million original issue discount[407]. - Ault Lending purchased 780 shares of ALZN Series B Preferred Stock for $0.8 million, bringing the total investment in ALZN Series B to $2.0 million[408]. - The reverse stock split of Ault & Company's common stock was executed at a ratio of 1-for-25, effective January 16, 2024[404]. - Ault & Company plans to sell four hotels under its subsidiary AGREE, aiming to focus on core businesses and use proceeds to pay off debt[410]. - Ault & Company has increased the dollar amount of Series C Convertible Preferred Stock that can be purchased from $50 million to $75 million[409]. - A segregated deposit account was established with an initial deposit of $3.5 million, requiring minimum balances to increase over time[403]. - Ault & Company anticipates returning value to stockholders after satisfying debt obligations and working capital needs[414]. Revenue and Financial Performance - Total revenue increased by $38.5 million, or 33%, to $156.4 million for the year ended December 31, 2023, compared to $117.6 million for the year ended December 31, 2022[419]. - Revenue from digital currencies mining operations increased by $16.4 million, driven by increased mining activities and a 2% higher average Bitcoin price, despite a 72% increase in average Bitcoin mining difficulty[420]. - Energy revenues rose by $47.1 million primarily due to the acquisition of Circle 8 in December 2022[421]. - Revenues from lending and trading activities were negative, impacted by a $6.2 million impairment related to equity securities and a $5.6 million unrealized loss from an investment[422]. - GIGA segment revenue increased by $7.5 million, including $2.6 million from the acquisition of Giga-tronics Incorporated, driven by defense-related investments and demand for electronics solutions[423]. - SMC revenues increased by $7.3 million due to the consolidation of SMC revenue for 11 months in 2023, following its acquisition in June 2022[424]. - TurnOnGreen revenues decreased by $1.3 million due to the cancellation of large projects that contributed to revenue in 2022[425]. - Gross margins decreased to 20% for the year ended December 31, 2023, down from 43% in 2022, affected by negative margins from digital currencies mining and lending activities[426]. Expenses and Impairments - Research and development expenses increased by $4.5 million, primarily for the development of ROI's BitNile metaverse platform[426]. - General and administrative expenses rose by $17.5 million, or 29%, to $77.8 million, mainly due to costs from new acquisitions and increased corporate aircraft usage[426]. - Microphase recognized a non-cash goodwill impairment charge of $3.2 million during the year ended December 31, 2023, due to a decline in sales[431]. - SMC also recognized a non-cash goodwill impairment charge of $3.2 million for the year ended December 31, 2022, following adverse changes in the business climate and a significant decline in sales[432]. - GIGA recorded a non-cash goodwill impairment charge of $9.9 million for the year ended December 31, 2022, attributed to a significant decline in sales and stock price[435]. - AVLP recognized an impairment charge of $14.0 million related to property and equipment as of December 31, 2023, with the estimated fair value of the property and equipment determined to be $0[435]. Cash Flow and Financial Position - The company reported net cash used in operating activities of $5.4 million for the year ended December 31, 2023, a significant decrease from net cash provided of $26.5 million in 2022[440]. - Net cash used in investing activities was $29.5 million for the year ended December 31, 2023, compared to $158.6 million in 2022, primarily due to capital expenditures for Bitcoin mining equipment[440]. - Net cash provided by financing activities was $37.0 million for the year ended December 31, 2023, down from $124.1 million in 2022, reflecting various stock offerings and debt payments[440]. - The company had cash and cash equivalents of $8.6 million as of December 31, 2023, an increase from $7.9 million at the end of 2022[438]. - Interest expense for the year ended December 31, 2023, was $36.6 million, slightly down from $37.3 million in 2022, with significant components including amortization of debt discount and contractual interest[438]. - The provision for income taxes was $0.3 million for the year ended December 31, 2023, compared to a benefit of $4.4 million in 2022, reflecting a change in the effective tax provision rate[438]. Asset Valuation and Impairment Reviews - The company reviews and evaluates the net carrying value of long-lived assets for impairment based on estimated undiscounted future cash flows and salvage value[444]. - Goodwill and indefinite-lived intangible asset impairment reviews involve estimating fair values using methods such as discounted projected future earnings or cash flow[444]. - Significant management judgment is required in estimating fair value, and actual results may differ materially from forecasts due to inherent subjectivity[444]. - If the carrying value of a reporting unit exceeds its estimated fair value, the excess is charged to earnings as an impairment loss, limited to the carrying amount of goodwill[444]. - The company continuously evaluates its estimates and judgments related to the fair value of financial instruments based on known trends and events[444].
Ault Alliance(AULT) - 2023 Q4 - Annual Report